SMALL BUSINESS LENDING-WHAT SMALL BUSINESS LENDING??? NO LENDING IS GOING ON TO SMALL BUSINESSES-IT'S A CREDIT DESERT OUT THERE!

The headlines purporting to see the light at the end of the tunnel relating to business picking up is a very dull and fading light. The stock market DOW INDUSTRIAL AVERAGE has shown signs of life and was spirited up over the last few months, but you have to remember that there are only 30 STOCKS!

These 30 companies, although representing a cross section of industrial giants are typically not the victims of the current lender's "loan desert" afflicting small business. Small business is defined as having variously less than 500, less than 100 or so employees, and is represented as responsible for most of new hiring and employs most Americans.

The banks receiving TARP funds were told to make loans to "small businesses" yet to date that has not really happened and causing many short of needed working capital to just close up or significantly cut back operations.

Small business is just considered too risky for lenders who are more worried about their derivative trading or counter-party losses, and to lend to a entrepreneur seems risky at best.

Typically small business lending consists of having collateral backing the loans as well as the personal guarantee of the principal owners or stockholders, and as there are less assets to pledge as collateral for loans, there is less lending! The vicious circle is ongoing.

We are seeing marginal businesses simply getting their credit lines canceled, and then all they can do is pay down the existing loans and just close or work on its own cash or credit cards of the owners, etc..

Do not believe the headlines, small business lending is constricted and indirectly what happens to larger business is that it benefits from the demise if is many smaller competitors who are now closing shop.

So the revenue pie may stay the same, but there are less businesses sharing it and thus the small ones close and the big one's grow; like the DOW AVERAGE members.

Is this good for the country? No. Everyone can not work for the giants, there is still a need for the small machine shop, for the boutique design firm, the small specialty chain store or local food store located in "food deserts" as we see the articles.

Hardest hit are businesses in traditionally low margin industries such as small manufacturing, retail and contracting, and the unemployment numbers show it.

Now, add to these credit issues the overhang of the various proposed mandates such as health care to be provided, as well as the numerous others that each state and federal government is calling for, and it can not be predicted to be good for the future growth of the economy.

Small business needs real lending, and most of all a government that understands lending to small business and supports the lenders who do such lending.